They will have to comprise at some point. If they kepe having backlogs of transactions people won't do stuff with bitcoin, then price will go down. It will regulate itself out in the end!

Will they? Seems like TPTB can buy as much hashpower as they need to drag this out forever (BitFury, BTCC, Slush).

Does that mean that we wont have a solution for the issues we are facing.Some has to hire a professional to negotiate with these people and come up with a amicable solution like they did with litecoin and they had Charlie Lee to lead the talks and we really need satoshi to come back and voice his opinion regarding these and reach a solution,if not they will be killing the economic invention of the century.

From which: P = M . V / Q, the price level depends on V and on Q. V depends heavily on the hoarding habits of people, and Q depends on the economic activity. If M is a hard number, it will never be stable. Especially if a large part of M is being hoarded, and V is very sensitive to the small amount of non-hoarded coins.

If there's a feedback mechanism from P to M, which is what central banks do, then this can stabilize P. If no such mechanism is known, P will be very dependent on V and Q.

A. Because of legal tender laws that force you to accept them. Does Fisher's formula take that into account?

Fisher's formula is essentially tautological. It goes like this:Q = the amount of economic goods that were bought with the currency, in a unit of value (say, a Big Mac, but it doesn't matter) in a given periodP = the price in units of our currency, of that unit of value (presumed stable enough during the period)

Clearly, Q . P = the amount of our currency that went over the counter to buy Q

M is the total amount of coins of our currency in existence (presumed fixed during the period)We split that amount in different "kinds": m0 ; m1 ; m2 ; m3 .... mn so that their sum is M.

m0 are the coins that didn't move during this period (were held)

m1 are the coins that were spend once during this period

m2 are the coins that were spend twice: from A to B, and from B to C.

m3 are the coins that were spend three times

...

mn are the coins that were spend n times.

Clearly, the total amount of spendings, is:

m1 + 2 m2 + 3 m3 + ... + n mn

The total amount of spendings must be equal to the total amount of coins that went over the counter:

P . Q = m1 + 2 m2 + 3 m3 + .... + n mn

Now, define V = m1/M + 2 m2/M + 3 m3/M + ... n mn/Mwhich is the weighted average number of times a coin was spend during this period.

Then we have: P . Q = M . V

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Forced acceptance of a rigged scheme is why Bitcoin was invented.

You shouldn't consider my critique of bitcoin as a critique of the idea to have a free currency. My critique of bitcoin considers the bad design of it, not its pretended reason of existence.

I bet the Chinese and Japanese exchanges, speculators and mining farms want to increase the block size and avoid off chain solutions. Why have the Asians not taken over development? They currently control most of the bitcoin market why shouldn't they control development? Why is the Western world controlling what has clearly become an Asian commodity?

This is an interesting article, but I would like to see the volatility definition he's using. Of course bitcoin cannot be that small circle. Maybe he's only taking, say, 24 hr volatility or something, and not the entire RMS of the whole curve, in other words, only the high-frequency spectrum of the price curve ?

Clearly, bitcoin's dollar price doesn't look like a FLAT LINE with some noise on it at all, which is what low long-term volatility would mean.

The point is that it is economically well-known that collectibles have no stable price, which was the problem with the booms and busts of gold-based currencies (which was essentially "solved" by fractional reserve banking, putting again elasticity in the monetary offer).

Does that mean that we wont have a solution for the issues we are facing.Some has to hire a professional to negotiate with these people and come up with a amicable solution like they did with litecoin and they had Charlie Lee to lead the talks and we really need satoshi to come back and voice his opinion regarding these and reach a solution,if not they will be killing the economic invention of the century.

"Centralized authority, please save us !"

The economic invention of the century would regulate itself, and wouldn't need an intervention from the board of gouvernors, don't you think ?

Bitcoin is volatile in terms of US Dollars. My point to dinofelis is: So what? Why is that a problem?

Another question for dinofelis: Why do people/businesses accept US Dollars in the first place?

It's a problem because US dollars, in this case, are representing what items you would be able to buy with Bitcoin as they're a relatively stable thing to compare it against. Bitcoin's volatility against USD means that it won't be practical for regular transactions until the amount of money that people hold in it has stabilised.

Indeed, it is somewhat delusionally to think that if some asset in a liquid market has high volatility as expressed in a major fiat, such as the US dollar, it is the dollar that is fluctuating and not the asset. In the relatively short term, big fiat are very stable units of account (unless something quite spectacular happens) in the sense that a quantity of this fiat represents a constant market value of commodities, whether it is bread, computers, cars, bananas, coffee, theatre tickets, or... other stable currencies.

Of course, and that was I think the essence of cryptoanarchists' remark, this is somewhat self-referential. But in the end, it doesn't matter. If you can buy about the same amount of Big Macs, bread, tooth brush, cars, bananas etc... with, directly, or after exchanging it for another currency, it HAS a stable value. Because in the end, value, that is an amount of Big Macs, bread, tooth brush, cars and bananas.

In the very long run, fiat currencies are less good units of account ; but then, not much is, because the notion itself of "same value" in remote and totally different economies is ill defined. How do you compare the value of, say, a dagger in the 7th century with something today ?

But a thing even used as a major currency, that doesn't have a price-stabilizing mechanism, will NEVER stabilize, simply because of the variable economic activity, and the variable velocity of money in Fisher's formula:

Q.P = M . V

From which: P = M . V / Q, the price level depends on V and on Q. V depends heavily on the hoarding habits of people, and Q depends on the economic activity. If M is a hard number, it will never be stable. Especially if a large part of M is being hoarded, and V is very sensitive to the small amount of non-hoarded coins.

If there's a feedback mechanism from P to M, which is what central banks do, then this can stabilize P. If no such mechanism is known, P will be very dependent on V and Q.

The way that you're measuring volatility is extremely one-dimensional.

As you can clearly see if you look at the actual charts instead of arbitrary measurements of day by day volatility, you'll realise that the US dollar's fluctuation is held fairly consistently around the same range.

Bitcoin's fluctuation is based on trends because the price is only about how much people are willing to pay in order to hold the coin.

Sure, you can say that Bitcoin is becoming less volatile, but in the last few weeks it's rose from about $1200 to about $1800. The US dollar's changes have been barely noticeable. It's just not a comparable type of volatility.

The way that you're measuring volatility is extremely one-dimensional.

As you can clearly see if you look at the actual charts instead of arbitrary measurements of day by day volatility, you'll realise that the US dollar's fluctuation is held fairly consistently around the same range.

Bitcoin's fluctuation is based on trends because the price is only about how much people are willing to pay in order to hold the coin.

Sure, you can say that Bitcoin is becoming less volatile, but in the last few weeks it's rose from about $1200 to about $1800. The US dollar's changes have been barely noticeable. It's just not a comparable type of volatility.

Indeed, I didn't look into the numbers, but I have the impression that analysis only considered the high-frequency part of the volatility (say, daily or hourly or so). As you correctly point out, the low frequency volatility (weeks, months, years) of most big fiat is pretty small, and that of bitcoin is still huge.For instance, over its 17 years of existance, the EURO and the USD never deviated more than something like 50%, going from an exchange rate of 0.8 to 1.5 or so.

Over its 8 years of existence, bitcoin did 6 orders of magnitude. Of course, that won't happen any more (1 billion a coin I'm hodling in case ). But in 2 years time, same vol, don't think so. It doesn't contain any regulating mechanism !

I am not a contributor to any Bitcoin projects, but I am quite familiar with the scaling topic because I’ve been following it for some time now, and I am knowledgeable enough to clearly understand the technical details.

Clearly not.

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As others have explained, there is no security provided to the network by non-mining ‘full nodes’.

It started with Ver's tweet, and now they're pushing this false rhetoric. The end goal of BU & the proponents is heavy centralization of the system. No wonder cypherpunk don't want to "compromise" with the loons.

Bitcoin is practically useless at this point until one of these scaling proposals are activated.

What is "unusable" to you, is usable to others.

If you used the "proper" fee your tx would have confirmed by now.

Not to mention there is a thing called Replace By Fee which you could have used (did you?) where you can submit another tx with a different fee amount after the fact to make sure it gets confirmed assuming you've been waiting for a while, which you have been.

This article is an opinion piece. There is nothing in it that constitutes proof. So you should refrain from using the term "proves you wrong" as it does not. The basis of the article is to take some past behavior and project it into the future. This is what is known as extrapolation. Proof by extrapolation is not really a thing. Also, in finance extrapolation is known to be a poor tool for anticipating the future. For example, look at XRP, it's grown 50x in 2 months. Let's extrapolate that to the end of the year. Oh wait, now XRP is worth 50^3 = 125000x its current value or >100tt usd market cap. Now I've proved that XRP will be worth as much as all the worlds equities by the end of the year. It must be true, because I proved it (would it help if I provide nice charts to show this proof on? I can, so please don't doubt its veracity.) The proof that you offered about BTC 2019 volatility is worth just as much as the one I've offered about XRP end of year market cap.

The irony here (situational) is that while you accused one person of blindly accepting formulas (he didn't, *), you have blindly accepted the analysis of a blogger and stated it to be fact. Are you able to see the irony in this?

(*) It's helpful to understand that V is simply defined to be the variable which makes the formula true. So by definition the formula is always true. It's sort of like blindly accepting 1=1. If you can accept that, then you should be comfortable with Fischer's formula.

As others have explained, there is no security provided to the network by non-mining ‘full nodes’.

It started with Ver's tweet...

Of course, I'm not a twit, so perhaps I am merely ignorant here. Is there some Tweet made on the part of Roger Ver which you are claiming has started the instances of people pointing out that non-mining entities have no actual power on the Bitcoin network? Because that is what it looks like you are claiming. Would you be a good sport and post a link to this alleged tweet that started it all? Thanks.

Anyone with a campaign ad in their signature -- for an organization with which they are not otherwise affiliated -- is automatically deducted credibility points.

I've been convicted of heresy. Convicted by a mere known extortionist. Read my Trust for details.

Of course, I'm not a twit, so perhaps I am merely ignorant here. Is there some Tweet made on the part of Roger Ver which you are claiming has started the instances of people pointing out that non-mining entities have no actual power on the Bitcoin network? Because that is what it looks like you are claiming. Would you be a good sport and post a link to this alleged tweet that started it all? Thanks.

This is something I've been claiming for quite a while, I'm not aware of any tweets or anything, I just came, totally by myself, to that (rather obvious) conclusion by studying the system. I've tried to explain that several times here, the reasoning is not so difficult to follow, and doesn't need any authority because it is a logical deduction from the known technical aspects of bitcoin - but if anything, it was the exact reason of why PoW was introduced in the first place.

That said, the fact that Satoshi introduced PoW to *deny full nodes any consensus decision power* is, in itself, not a logical proof: it would be a fallacy as I've been lining out several others of committing the error of taking a desirable goal as a logical consequence. So it is not because Satoshi *wanted* full nodes not to have any consensus decision power, that this is the case. It is simply the case because if you do the *Gedanken experiment* where all non-mining full nodes try to enforce a protocol change, and all the miners keep on their protocol, it are the miners that win, and the full nodes that stop. I consider that as the logical proof that purely technically, full nodes don't decide anything, nor about the building of the block chain, nor about the protocol it has to obey.At best, full nodes can *signal* a kind of desire by users - but they are not representative of users. Less than 1% of users runs a full node, and maybe many of them aren't even strongly attached to the "signal" of their node, they just want running software. >99% of users don't have full nodes ; nobody knows what is the economical weight of the full node owners who are strongly politically committed to one or another choice, so nobody can have an idea what block chain would get most of the market cap after an eventual hard fork (which is what full nodes, at best, could signal, if they were economically representative, which they aren't).

Miners make the block chain(s) ; users vote on it with their money on exchanges. Miners sell block chain to users, who pay for it by buying the coins miners obtain that way. Users "buy block chain" because they have reasons to want to use it (for transactions, for speculation, ....) That's the economic model of a PoW crypto currency. Full nodes are proxy servers putting themselves in between the miners and the users, which have as limited use, the fact that users don't have to have a direct internet connection to miners, but can use also a P2P network to obtain their certified transactions on the chain, and to send their transactions to the miners who will hopefully include them in the chain they collectively produce. If direct internet connections are possible, the use of full node proxy servers is questionable. If direct internet connections are problematic, the full node proxy servers have a useful communication role.

Full nodes can be useful for their owners: checking what happens (without power to act) ; deniability of sending one's own transactions. Fun.